Startups

Wanted: Moron to Buy YouTube

Dot-com billionaire and media mogul Mark Cuban is firing up debate after a News.com article in which he's quoted as saying "anyone who buys YouTube is a moron", adding "they are just breaking the law, the only reason it hasn't been sued yet is because there is nobody with big money to sue". The statements came at the TV Week Spotlight event yesterday. The irony, of course, is that Cuban made his fortune selling the web radio company Broadcast.com for $5.7 billion during the bubble - I'm sure he, and many others, wish they were in Chad Hurley's position at the head of one of the hottest web startups. Another noteworthy tidbit: Mark used the opportunity to discourage advertisers from hooking up with YouTube, while encouraging them to buy commercials on his HDNet network. Also note that Mark is the king when it comes to getting people talking about him.

So is there any substance to the claims? Well, YouTube has already faced legal action (see Youtube sued), and it's true that the site is packed full of copyrighted content - a buyer would be taking a huge risk. That said, YouTube has grown so fast that they've been able to convince content owners to partner with them, rather than suing. The NBC-YouTube deal, segmenting the audience with YouTube Colleges, launching branded sections with the help of Paris Hilton and staging sponsored contests like YouTube Underground all mark a trend towards legitimacy. In the end it comes down to money: if YouTube can increase the profits of the content creators, they won't bother to sue. Unless, of course, they become jealous and decide to shoot themselves in the foot - there's an outside chance that a media company with a rival online video service might have a go (Fox?).

And the fact is that it pays to be skeptical: even if YouTube is bought for a billion, the skeptics can maintain that the buyer was a fool. If they then go on to make billions more through ad deals, you can say that the advertisers are morons, too (see MySpace-Google, for example). In many ways, it's considered better to be skeptical and proven wrong than optimistic and proven right. When MySpace crashes - even if it doesn't happen for 3 years and becomes massively profitable during that time - the skeptics will still claim to be right.

The fact is that YouTube would make a good acquisition for someone, but at $1.5 billion, you'd have to be a moron in a hurry.

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